Clark Blackwell

Wendy Herndon's post "Bankers, are you listening?" was excellent. Paraphrasing one of the other responses, "The basic problem is lack of personal contact. We need to return to small businesses dealing with community bankers." You're dealing with monolithic, soul-less entities that we (including myself) created and eagerly sustained by continuing to feed the beast "liar loans" long after we all realized we were contributing deck after soiled deck to what was becoming an increasingly rickety house of cards.

For the record, though we enjoyed the dubious distinction of having been "qualified" to do so, my bank (Crescent Bank of Jasper, GA) has not taken a dime of TARP money. That's not to say that we couldn't use a healthy infusion of capital. We simply prefer to keep Obama/Reid/Pelosi off the Board as long as humanly possible. . .

Back on subject, an AR Realtor posed the question to me last week of whether a lender is entitled to collect on PMI following a short sale. The answer is "no" and the logic behind it goes a long way toward addressing the issue Wendy raised. When you boil it all down, when a lender accepts a short sale offer, they are voluntarily de-valuing both their asset (the loan itself) as well as the underlying asset (the real estate which serves as collateral, aka secondary repayment source). Therefore, the lender logically forfeits the right to collect on the PMI. Then, there's the issue of "recourse", which means the lender customarily reserves the right to seek a judgment against the borrower's remaining assets in order to ultimately collect the "short" (deficiency balance). If the lender agrees to a NON-RECOURSE short sale (as hard as I've tried, I really can't think of a situation in which I'd ever consider doing this), there is a conscious and well-considered reason for forfeiting the right to collect a deficiency balance, which brings up other potential legal arguments.

Taking off my "outhouse lawyer" hat, this is uncharted ground for ALL of us. Regardless of who ultimately created the monster (I suggest that you start with CRA legislation, which goes back several decades), throngs of Americans have become homeowners over the past 10 years who never had enough skin in the game to continue to do so. As I've blogged before, in both residential and commercial real estate, it all goes back to lack of skin in the game. Shame on Washington for incentivizing it, shame on lenders and realtors for living off it, and shame on Wall Street for putting it all in neatly-wrapped sacks of crap called MBS.

In 21 years of community banking, I have never been down this road before. Many of my colleagues have not done so in 30 or 40 years in the business. Though it sounds both trite and chidlishly simple, a big dollop of empathy between realtors & bankers will continue to take us a long, long way.

If you grew up in the deep South, as I did, you're aware of the unique quirks of our native dialect. Mark Twain hit on some of it, Jeff Foxworthy has built a career on it, and the entire cast of Hee Haw continues to celebrate it weekly on RFD TV.

Today's words (quite unintentionally associated with food):

Dinner: noun; The midday meal. Known as "lunch" by everyone outside the rural South.

Supper: noun; The evening meal. Known as "dinner" by everyone outside the rural South, except in biblical times.

Sweetmilk: adjective / noun combination; Whole milk. Cow's milk with no butterfat removed, differentiated from buttermilk by taste & consistency. I was in high school before I knew these were two separate words.

Pone: noun; The general measurement of a family-size quantity of cornbread, coincidentially the exact diameter and thickness of a #12 iron skillet.

Sodiecracker: adjective / noun combination; Bland, square, well-salted, almost tasteless snack which is now popularly known as a "Saltine". Goes particularly well with Vienna sausages and pork & beans, especially when eaten outdoors near a river or a campfire.

Loafbread: adjective / noun combination; Also popularly known as "whitebread". Highest and best use is to encase a bread-sized slice of a Better Boy tomato, well-salted, between two slices, with a generous dollop of mayonnaise in between. Goes well with a fruit-jar of sweetmilk, for either dinner or supper. Often also consumed at breakfast by adding lettuce, bacon, and a side of grits, no sugar, please. (It's not that sugar is bad for our health. It's just plain wrong).

I have no statistical basis for this, but as you know by now, I'm never reluctant to pass along my un-varnished opinion.

In my 21 years as a Georgia community banker, I've learned that the people & companies who truly succeed are those who provide consistently superior service by sweating the small details. Those who either can't or won't do what's right always resort to 'purchasing' customer loyalty with expensive gifts. It's the same as the non-custodial parent who's compelled to buy big-ticket toys for the child they lost custody of. In the end, you can buy neither love nor loyalty.

Relatively inexpensive tokens of appreciation are one of the crucial details that turn customers into raving fans (It's the thought that counts).

When I'm the customer (i.e. of a real estate closing attorney, etc), receiving front row tickets to a ball game leads me to assume that there was too much margin there. I'd much rather have paid less for the service & skipped the ball game.

As a case in point, next time you eat at Chick-fil-A, try saying "thank you" to any employee in the building. If the response isn't an enthusiastic "My pleasure", I'll buy you a chicken sandwich next Sunday. (Obviously I'm pretty confident about this. Chick-fil-A ain't open on Sundays.)

Again, this is my opinion, which is usually somewhere way past the right field foul pole.

Recently I teamed up - more than a little reluctantly - with a co-worker to participate in a Career Fair at my daughter's middle (junior high) school. All of us had been thoroughly briefed by the local Chamber of Commerce about what questions to expect, how to take charge of the class, etc. Three "veteran" career fair speakers gave testimonials about their previous experiences. The common thread was, "Be prepared for the question, 'How much money do you make?'".

I prepared by getting together two stacks of Monopoly $500's & $100's and all nine stock certificates from the game of Life. My plan for the props was to give a basic class on starting a bank. I also took along enough workbooks on budgeting for each 8th grader, and just for good measure I wore my best dark gray pinstripe suit, French blue shirt & silk tie.

What fun it was! I learned the basics of using a "Smart Board" (banging dust from erasers at the end of the day is soooooo early 90's). Best of all, the bankers DIDN'T have to follow the guy with the drug dog.

I came away with the assumption that this is how it would feel to be a teacher every day if you didn't have to deal with administrators, political correctness, lack of religion, office politics, unfunded government mandates, useless documentation, and - ahem - parents. One of the classrooms we rotated through was that of Ms. Miles, who teaches Pre-Algebra. As I was speaking I noticed a statement clearly done with 6-inch, hand-cut letters on the opposite bulletin board. It posed the question teachers should always address (yet so few of mine ever did): "Why do I need to know this?".

At that moment, Ms. Miles became my hero.

Why will I ever need to know this crap [Algebra, History, Social Studies, Language Arts, Science, and Geography] in real life? I've personally used these words, and I'll wager that most of us have done so at some point while being forced to do homework even though we had much bigger fish to fry. Little did I know while in grade school that I'd use the knowledge gained from almost all these subjects on an almost-daily basis, not only in real estate & banking, but in being a parent & volunteering as a Boy Scout leader, and even in running a family home.

This subject came to mind as I was reading this week's Coffee News over a sandwich. Coffee News is cheaply-printed in black & white font on glow-in-the-dark yellow 14X17 paper, folded in half to save display space. In the style of rural mom & pop restaurant menus, all 3 inches of margin on each side, top, and bottom of the paper contains ad space. Old, tired, inspirational stories and jokes are printed in the middle (ad-free) portion. It's a lousy little low-budget publication, but it's free and I've grown to look forward to reading it during lunch.

One of the ads I've been noticing for several months is for a guy pushing annuities (probably variables, I'd guess, since that's where the big commissions are). The ad reads:

"Never loose your principle again."

Yes, friends, you're reading it exactly as printed. Of course, standard spell-check wouldn't have caught a misspelling because both "loose" and "principle" are spelled correctly. Now I'm loosing my principle [unleashing my belief system]. Let's first assume that this was (is) a misprint on the part of the publisher. If that were the case, our annuity salesman could've corrected the grammar many months ago. Since he hasn't done so, I'm inferring that the annuity guy submitted the ad this way when he rented the space. Aside from my lack of comfort with annuities of any kind, I asked myself if I'd be inclined to trust this person with my money based on his grammar-butchering advertisement. NOT A CHANCE.

In my opinion, poor grammar in any form of marketing indicates carelessness, a reluctance to seek advice from experts, questionable judgment, and a general lack of professionalism. Finally, grammar issues aside, the validity of the statement is questionable. It IS possible to lose principal with an annuity.

Do you prefer not to lose your principal again? Open a CD at an FDIC-Insured Community Bank.